Market On Open, Monday 16 September

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The Rate Cut Doesn't Matter

by Alex King, CEO, Cestrian Capital Research, Inc

I have no idea whether the Fed is going to cut by 25bps, 50bps, 200bps, 0bps, whether Chairman Powell is going to wear the purple tie or not (this is apparently a thing), and whether cutting by X bps signals a neatly executed denouement to the higher inflation era, a recession indicator, or a ticket to 1970s style stagflation. No clue.

What I do know is that trying to guess what happens is more or less pointless as regards securities markets, because it’s not about the number at all; it’s about how the market reacts to the number (i) on the print (ii) at the close after the print and then (iii) at the close the next day. The real market reaction is likely (iii) the following day’s close, and the “let’s fuze the logic circuits of small investors' brains for a little while so we can take money off of them just for fun” salad spinner is the time from the print to the day's close.

We can't tell you ahead of time what the market will do. But we can and do chart in real time to watch what the market just did, and the best clue to what the market is about to do is ... what the market just did. Because markets aren't a crazy random walk down Wall Street; they have a long-term direction and a short term direction and the motion is very far from Brownian, but instead has patterns to it. And by learning to spot those patterns as they form and dissolve - which is what we teach here in addition to providing actionable ideas - you can learn to be outside the salad spinner whilst friends, colleagues and family members are mercilessly whirligigged.

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Short- And Medium-Term Market Analysis

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